Shopping for a mortgage can be as challenging as it is exciting. On one side, you feel like a kid in a candy store because you’re shopping for a loan that you’ll be using to buy a house. On the other side, you’re apprehensive because you don’t want to jump into a less-than-deal commitment. Then there’s also the cost of shopping for the mortgage itself, which stems from having to meet with brokers, agents, lenders, and other professionals who charge a penny for their time. With that said, we’ve put together a list of five tips you can use to save money while shopping for a mortgage:
1.Conduct an Online Comparison First
Although many people like to discuss real estate and mortgages in person or over the phone with their broker or lender, the internet is a valuable resource that can help you build a list of mortgage lenders to compare. Thus, be sure to expand your horizons and shop around online before jumping at the first mortgage offered by a local lender.
2. Ask for a Seller’s Concession
Asking the seller for a 6% seller rebate is one way to include the cost of closing the deal in your mortgage, so these costs don’t come out of your pocket. In addition, it effectively turns closing costs into tax write-offs. If you would like to learn more about what expenses are covered under closing costs, you can visit websites similar to sharonsteelerealestate.com.
3. Educate Yourself By Researching, Don’t Pay for Information
Nowadays, if you’re willing to spend the time studying you can become a quasi-expert on just about any topic. While it might seem tempting to pay a professional to teach you about real estate and the housing market, it is in fact easier to learn at your own pace, and you’ll usually wind up retaining more information if you do the research yourself. If you’ve never purchased a home before, a great way to become familiar with all the facets involved would be to read a first time buyer guide.
4. Make a Down Payment of at Least 20% to Avoid Paying PMI
If your mortgage loan covers more than 80% of the home’s purchase price you’ll probably be required to pay private mortgage insurance (PMI), which could cost you as much as 1500 per year on a 150,000 loan. To eliminate this expense, make sure you’re shopping for homes that you can afford more than a 20% down payment on.
5. Consider Assuming the Current Mortgage
Sometimes it is possible to assume the current mortgage of the home, which would of course be beneficial if the existing interest rates and monthly payments are lower than they would be if you were to take out a new loan. Going this route also eliminates some of the administrative costs associated with taking out a new mortgage.
Exercise Patience and Do Your Due Diligence
In closing, try to remember that good real estate deals are always a product of balancing patience with urgency. When you see a great deal, you act urgently. Likewise, if you’re not completely confident in a decision, it would be better to wait on something better. This same principle can be applied to the process of shopping for a mortgage. Don’t let your own haste put you in an undesirable financial situation, because it won’t be so easy to change course once you’ve committed.